Companies spend a large portion of operating expenses each year on advertisements. In traditional advertising environments (e.g., newspaper, magazines, television), the price of an advertisement is typically based on visibility. For example, an advertiser pays more for an ad placed on the front page of a newspaper than the ad placed on the third page of the second section of the newspaper. With these traditional methods of advertising, a cost of the advertisement is known up-front, and the expected return on investment is based on the degree of visibility that the advertisement receives.
With people changing to a computer-based society, companies are turning towards internet-based advertising. Here, the advertisers typically bid auction-style for placement of ads or for keywords within a web page, with the bid price indicating the amount that the advertiser offers to pay the auctioneer, either per impression or per click-through. Click-through rate (CTR) measures a success of internet-based advertising, by dividing a number of users who clicked on an ad on a web page by the number of times the ad was delivered (impressions).
Advertisers pay when a user actually clicks on an ad to visit the advertiser's website, commonly known as pay per click (PPC). The paid search auctions return relevant paid advertisements in response to queries from users. In order to return relevant content, advertisers bid on keywords that their target market would type in the search bar when looking for a service or a product. For example, an advertiser purchases the keyword, “pink flowers”. In this example, a user types in the phrase “pink flowers” in the search bar. The phrase matches the advertiser's keyword list or displays an advertisement with relevant content for the purchased keyword of “pink flowers”. Thus, advertisers may bid for spots in conjunction with a particular keyword that a user may enter for a search.
Along with their bids, advertisers also typically submit a budget amount. After the budget is reached (based on the price paid per received click-through of the ad), the advertisement is no longer displayed. Over time, advertisers have determined ways of increasing revenue by submitting lower bids, which lowers the revenue for the auctioneer (e.g., a search engine) providing the advertising slots or keyword suggestions.
A problem with purchasing keywords is that there is tremendous variation in search phrases typed by users. Rather than thinking of a single monotonic phrase like “pink flowers”, there will often be a variety of phrases that may mean the same thing. Thus, the advertisers would convert to this variety of phrases, if the searchers were presented with the advertisement. Also, it is difficult to identify a wide variety of phrases and to suggest related phrases. Thus, keyword suggestion searching has not been widely utilized by advertisers in internet-based advertising.